You can take the Huang out of the streets…

The big news in the Chinese tech sector this week is the ongoing drama of Huang Guangyu, founder and chairman of China’s largest electronics retailer GOME. Huang, one of the richest men in China, is currently being held under investigation for “suspected economic crimes”.

I find it somewhat astounding, but a bit unsurprising, that Huang may have sacrificed his career, status and fortune to help bump up his brother’s drugs/medical equipment company, Shandong Jintai Group, with a bit of illegal share price manipulation.Huang is well-known in China as being the archetypal example for the new class of self-made-men/women in the country that is still capitalizing on the now 30-year-old “to be rich is glorious” axiom.

When a poor 16-year-old Huang dropped out of school in Guangdong to travel to Beijing with his brother–armed with little more than a bag of electronics to sell–it might have been hard to picture him becoming a multi-billionaire (and three-time champ of the “China Rich List” list) before his 40th birthday.

Huang sold the radios, batteries and electronic gear on the streets of the capital, eventually working up to a proper electronics store, which he has built into GOME, China’s largest electronics retail chain.

So where’d it all go wrong? By all accounts Huang is a reserved, polite and considerate family man. A hardworking businessman who understands the value of a yuan better than most. How did he end up being held by Beijing police?

It’s the stuff that touching Hollywood dramas are made of. You know, the kind that feature gratuitous usage of flashbacks, and a “now we all know better of the corruption money brings” moralist ending. You can almost picture the opening scene with Huang and his brother running to catch the train in the Guangdong countryside, a sack of Duracell knockoffs on their backs, then a sharp cut to a tired and sweat-stained Huang being grilled in a Beijing interrogation room.

As of writing this, the story has yet to break on what actually happened, and what punishment Huang may face. However, I believe we are looking at an endemic problem in China’s business world, which is a long way from being sanitized.

Despite all its advancements, China is still often called the “Wild West (of the East)”, and for good reason. When on the rise, the rule of law is often simply a playbook of suggestions, easily bypassed with the right relationships and restaurant visits. However, if and when dubious actions are called into question, the rules can quickly change from a gentle touch to an iron fist.

I’m not saying Huang and his brother didn’t know what they were getting into, nor am I saying they shouldn’t be punished appropriately. But, unless this is all a huge CPC-endorsed socio-economic experiment to see who will cheat, a large amount of transparency and order will need to be given to business practices in China before there are no executives left to run “The Rise”.